Special Report No 21/2012 ‘Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency’
Date: 2013-02-09
Institutions: European Court of Auditors
Subjects: EU investment, economic and social cohesion, energy efficiency, energy saving, profitability

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COST-EFFECTIVENESS OF 
COHESION POLICY INVESTMENTS 
IN ENERGY EFFICIENCY

EN

 
 
 
 
Special Report No 21 

 2012

COST-EFFECTIVENESS OF COHESION 
POLICY INVESTMENTS IN ENERGY 
EFFICIENCY

(pursuant to Article 287(4), second subparagraph, TFEU)

EUROPEAN COURT OF AUDITORS

EUROPEAN COURT OF AUDITORS
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LUXEMBOURG

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E-mail: eca-info@eca.europa.eu
Internet: http://eca.europa.eu

Special Report No 21 

 2012

A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu).

Cataloguing data can be found at the end of this publication.
Luxembourg: Publications Office of the European Union, 2013

ISBN 978-92-9241-027-8
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© European Union, 2012
Reproduction is authorised provided the source is acknowledged.

Printed in Luxembourg

3

CONTENTS

Paragraph

GLOSSARY

I–V 

EXECUTIVE SUMMARY

1–7 

1–3 

INTRODUCTION

ENERGY EFFICIENCY

4 

EU POLICY OBJECTIVES

5–7 

COHESION POLICY FINANCIAL SUPPORT

8–11 

AUDIT SCOPE AND APPROACH

12–50 

OBSERVATIONS

12–35 

PLANNING AND FINANCING

12–17 

OPERATIONAL PROGRAMMES WERE NOT BASED ON PROPER NEEDS ASSESSMENTS

18–22 

COST-EFFECTIVENESS WAS NOT A DETERMINING FACTOR WHEN ALLOCATING FUNDING TO ENERGY EFFICIENCY 
MEASURES

23–28 

WEAKNESSES IN PROJECT SELECTION CRITERIA

29–35 

INADEQUATE PERFORMANCE INDICATORS AND MONITORING

36–50 

IMPLEMENTATION OF PUBLIC BUILDINGS PROJECTS

36–40 

ENERGY EFFICIENCY NOT THE MAIN OBJECTIVE

41–44 

ENERGY AUDITS NOT ALWAYS OBLIGATORY OR NOT OF GOOD QUALITY

45–50 

PROJECTS PRODUCED PHYSICAL OUTPUTS, BUT AT A HIGH COST IN RELATION TO THE ENERGY POTENTIALLY 
SAVED

51–52 

CONCLUSIONS AND RECOMMENDATIONS

ANNEX I 

— 

 COHESION POLICY FUNDS ALLOCATION TO ENERGY EFFICIENCY 2000–13 
AND SELECTED PROJECTS 2007–11

ANNEX II 

— 

PAYBACK PERIOD AND ENERGY SAVINGS ACHIEVED BY PROJECTS IN THE 
CZECH REPUBLIC, ITALY AND LITHUANIA

REPLY OF THE COMMISSION

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

 
 
 
GLOSSARY

4

Cohesion policy: EU policy aiming at strengthening economic, territorial and social cohesion within the EU 
by reducing the development gap among the various regions. This audit concerned, in particular, the follow-
ing two funds: 

(a)  The European Regional Development Fund (ERDF), which invests in infrastructure, creates or preserves jobs 

and sustains the local development activities of small and medium-sized companies;

(b)  The Cohesion Fund (CF), which strengthens economic and social cohesion by financing environment and 

transport projects in Member States with a GNP per capita of less than 90 % of the EU average.

Cost-effective investment: Lowest cost alternative for achieving a given level of performance or the highest 
level of performance alternative for a  given level of cost. It may also be used for the comparison and priori- 
tisation of alternative projects within a programme. (Kreith, F., Goswami, Y. D.  Handbook of Energy Efficiency and 
Renewable Energy, Taylor & Francis, Boca Raton, USA, 2007). The best relationship between resources employed 
and results achieved is a requirement of EU spending (see Article 27(2) of the Financial Regulation).

Cost-optimal methodology for buildings: The cost-optimal methodology aims to create a legal framework 
for raising the Member States’ minimum energy performance requirements for buildings to ensure that all 
economically rational measures are adopted. 

Energy audit: A standard energy audit consists of a  comprehensive energy analysis for the energy systems of 
a facility. In particular, it includes the development of a baseline for its energy use, an evaluation of potential 
energy savings, and the cost-effectiveness of appropriately selected energy conservation measures.

Energy efficiency: Energy efficiency refers to using less energy input for an equivalent level of economic 
activity or service. Investment in energy conservation and energy efficiency provides a better economic and 
societal return than investment in energy supply. Energy efficiency increases the potential for economic 
growth, makes companies more competitive, lowers household energy bills and leads to lower energy import 
dependency and reduced emissions. 

Managing Authority: The national, regional or local body designated by the Member State, which proposes 
the operational programme to the Commission for adoption and is responsible for its subsequent management 
and implementation.

Measurement units of energy:

 ο

Tonne of oil equivalent (toe) is the amount of energy released by burning one tonne of crude oil, approxi-
mately 42 GJ.

 ο Giga joule (GJ) 

 ο Giga/Mega/kilo watt hour (G/M/kWh)

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

5

National Energy Efficiency Action Plan (NEEAP): In their NEEAPs, the Member States must explain how 
they intend to reach the 9 % indicative energy savings target by 2016, as required by Directive 2006/32/EC of 
the European Parliament and of the Council on energy end-use efficiency and energy services. NEEAPs should 
describe intended energy efficiency improvement measures and the steps to be taken to comply with the 
provisions on the exemplary role of the public sector and providing information and advice to final consumers.

Operational Programme (OP): A document submitted by a Member State and adopted by the Commission 
setting out a development strategy with a coherent set of priorities (known in the Regulation 1083/2006 as 
‘priority axes’) to be implemented with the aid of a Cohesion Policy fund. Priority axes comprise a group of 
operations which are related and have specific measurable goals. They are further broken down into measures. 
Measures (used in the report also to mean steps or processes) provide for a project or group of projects, which 
are selected by the managing authority (according to criteria laid down by the monitoring committee) and 
implemented by one or more beneficiaries. 

Simple payback period: The payback period is one of the evaluation methods for cost-effectiveness. It meas-
ures the elapsed time between the time of an initial investment and the point in time at which accumulated 
savings are sufficient to repay the initial investment.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

6

EXECUTIVE SUMMARY

I.
The cost of increased energy consumption, the deple-
tion of fossil fuel reserves and the effect of human 
activities  on  global  climate  change  are  drivers  of 
recent energy efficiency policies. Since 2000, the Euro-
pean Union, through its Cohesion Policy funds, has 
made available almost 5  billion euro for co-financing 
energy efficiency measures in the Member States. The 
European Commission and the national and regional 
authorities  are  responsible  for  the  sound  financial 
management of these funds in accordance with the 
‘shared management’ system. 

II.
The  European  Court  of  Auditors  assessed  whether 
Cohesion Policy investments in energy efficiency were 
cost-effective. To answer this question, the Court asked 
whether:

(a)  the right conditions in programming and finan- 
cing had been set to enable cost-effective energy 
efficiency investments; and whether

(b)  energy efficiency projects in public buildings were 

cost-effective.

III.
The audit was carried out in the Czech Republic, Italy 
and Lithuania — the countries that had received the 
largest  contributions  from  the  Cohesion  Fund  and 
European Regional Development Fund for energy effi-
ciency measures for the 2007–13 programming period 
and had also allocated the highest amounts to projects 
by 2009. The audit included an examination of four 
operational programmes and a sample of 24 energy 
efficiency investment projects in public buildings.

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7

EXECUTIVE SUMMARY

IV.
The Court concluded that: 

(a)  the right conditions in programming and finan-
cing  had  not  been  set  to  enable  cost-effective 
energy efficiency investments, since: 

 — The operational programmes audited had not 
benefited from proper needs assessments to 
identify the specific sectors where energy sav-
ings  could  be  achieved  and  the  options  for 
achieving  those  savings  in  a cost-effective 
manner, thereby justifying the chosen meas-
ures and their cost. The national authorities 
did not ensure that they were integrated into 
the National Energy Efficiency Action Plans;

 — Cost-effectiveness concept, or the best rela-
tionship  between  resources  employed  and 
results achieved, was not a determining fac -
tor  when  Member  States  allocated  funding 
to energy efficiency measures and concrete 
projects. Neither was this concept part of the 
Commission’s assessment prior to approval of 
the operational programmes; 

 — Performance indicators for energy efficiency 
measures were not appropriate for the moni-
toring of the programmes. The Commission’s 
monitoring guidelines did not lay down indi-
cators concerning energy efficiency. Therefore, 
the results of the energy efficiency measures 
reported by the individual managing authori-
ties are not comparable across the EU and can-
not be aggregated. 

(b)  the audited energy efficiency projects in public 

buildings were not cost-effective: 

 — Although all the audited projects produced 
the  planned  physical  output,  such  as  re -
placed windows and doors or insulated walls 
and roofs, the cost in relation to the potential 
energy savings was high. A more important 
consideration than energy efficiency was the 
need to refurbish public buildings. While the 
projects audited aimed at saving energy and 
improving  comfor t,  they  did  not  generate 
a good ratio between energy savings and the 
corresponding investment cost. The average 
planned payback period for the investments 
was around 50 years, which is far too long con-
sidering the lifetime of the refurbished com-
ponents and even of the buildings themselves;

 — Energy audits were either not mandatory (It-
aly, Lithuania) or, where they were required 
(Czech Republic), the investment options rec-
ommended in the energy audits were far too 
costly. In 18 out of 24 audited projects actual 
energy  savings  could  not  be  verified  since 
they had not been reliably measured.

V.
The Court recommends that the Commission make the 
Cohesion Policy funding for energy efficiency meas-
ures subject to a proper needs assessment, regular 
monitoring and the use of comparable performance 
indicators as well as the use of transparent project 
selection criteria and standard investment costs per 
unit of energy to be saved, with a maximum accept -
able simple payback period.

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8

INTRODUCTION

ENERGY EFFICIENCY

Improved energy efficiency means using less energy input for an equiva-
lent level of economic activity or service. Energy efficiency measures 
offer still untapped possibilities for reducing energy consumption, curb-
ing the negative effects of human activities and fostering energy secur- 
ity1. Improved energy efficiency is important in residential, public and 
commercial buildings, the manufacturing industry, transport, and power 
generation and distribution. 

1  COM(2006) 545 final of 
19 October 2006 — Action 
Plan on Energy Efficiency: 
Realising the Potential.

2 

Ibid.

Typical energy efficiency investments include the additional insulation of 
buildings, energy-efficient windows, thermoregulation, the upgrading of 
district heating systems, industrial motors, electrical and steam systems, 
combined heat and power generation and energy recovery from venti-
lation air and waste and recycling materials. In transport, a significant 
impact can be achieved by shifting transport from road to other modes2 
and through improved fuel efficiency.

As shown in Table 1, the potential for energy efficiency is far from be-
ing fully exploited (progress was assessed by the Commission through 
a comparison of the original projections made in 2007 and the most 
recent ones from 2009). Many factors hamper investments in energy ef-
ficiency. The most important are high initial costs and uncertain benefits. 
Investment decisions are influenced by energy prices, regulatory uncer-
tainty, the availability of subsidies, and access to credit. These barriers 
can be tackled by public measures addressing market and regulatory 
failures. 

1. 

2. 

3. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

EU POLICY OBJECTIVES 

4. 

The promotion of energy efficiency is set by the Article 194(1) of the 
Treaty on the Functioning of the European Union in the context of the 
establishment and functioning of the internal market and the need to 
preserve and improve the environment. In 2007, the EU set itself a non -
binding target of saving 20 % of its projected primary energy consump -
tion by 20203. However, according to the Commission’s assessment 4 of 
current policies (including those still in the design phase), without fur-
ther action the EU will have achieved overall only 9 % energy savings 
by 2020 (see Table 1). Most of the additional efforts to achieve the 20 % 
target will be required by the residential and tertiary (commercial and 
public buildings) sectors5. A new Energy Strategy for the 2011–20 period 
calls for stronger political commitment through ‘a clear definition of the 
objective’ to be achieved and ‘strong compliance monitoring’ of the EU 
legislation as enacted in national law6.

9

3  Presidency Conclusions 
of the European Council 
of 8/9 March 2007, 
doc. 7224/1/07 REV 1. This 
objective translates into 
a saving of 368 million tons 
of oil equivalent (Mtoe) 
of primary energy (gross 
inland consumption minus 
non-energy uses) by 2020 
compared to projected 
consumption in that year 
of 1 842 Mtoe, implying 
a consumption level of 1474 
Mtoe. This objective was 
reconfirmed by the June 2010 
European Council (17/6/2010 
No: EUCO 13/10) and is 
taken up by the new Energy 
Efficiency Directive.

4  SEC(2011) 277 final of 
8 March 2011.

TABLE 1

PROJECTED DEVELOPMENTS AND ENERGY SAVINGS POTENTIAL IN 2020

2020 (baseline 
2007)
[Mtoe]

2020
(baseline 2009)
[Mtoe]

Expected progress 
in 2020 without 
further action (%)

2020 Economic 
potential (%)

1

1 842

1 348

368

439

336

205

494

2

3 [=(2-1)/1*100]

4

1 678

1 214

327

395

310

181

464

-9 %

-10 %

-11 %

-10 %

-8 %

-12 %

-6 %

-20 % 
(EU target)

-19 %

-13 %

-21 %

-24 %

-17 %

-35 %

Gross inland consumption minus final 
non-energy use

Final energy consumption, 
of which: 

Industry

Transport

Residential 

Tertiary

Energy transformation, transmission 
and distribution

Source: Commission Staff Working Paper, Impact Assessment, Accompanying the Directive of the European Parliament and of the Council 
on energy efficiency and amending and subsequently repealing Directives 2004/8/EC and 2006/32/EC, SEC(2011) 779 final.

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5. 

6. 

COHESION POLICY FINANCIAL SUPPORT 

The EU has several spending programmes 7 for promoting energy ef-
ficiency policy. The most significant funding sources are the Cohesion 
Policy funds (the European Regional Development Fund (ERDF) and the 
Cohesion Fund (CF)). In the 2000–06 programming period, the ERDF 
and CF supported projects in the field of energy efficiency with 306 mil-
lion euro 8.  In  the  2007–13  programming  period,  the  overall  planned 
allocations to energy efficiency have so far increased from 4  192  mil-
lion euro in 2008 to 5 078 million euro in October 2012 (see Annex I for 
the breakdown by Member States in 2000–13). In the 2014–20 program-
ming period, the Commission has proposed the allocation to be more 
than 17 billion euro 9. 

SHARED MANAGEMENT 

Within Cohesion Policy, the Commission issues guidelines for drawing 
up  operational  programmes.  At  the  beginning  of  the  programming  
period,  it  negotiates  and  approves  the  individual  operational  pro-
grammes proposed by the Member States. Its task is also to supervise 
the setting up and operation of management and control systems in 
the Member States. Later, its main role is to monitor the implementation 
of the operational programme, but it is not involved in the day-to-day 
management of individual projects. The Commission receives annual 
implementation reports from the Member States and participates in 
monitoring committees10. The Commission is ultimately responsible for 
the budget implementation11.

10

5  Residential, commercial 
and public buildings are 
responsible for nearly 40 % 
of energy consumption and 
they have the largest energy 
savings potential. Publicly 
owned or occupied buildings 
represent about 12 % by area 
of the EU building stock and 
the Energy Efficiency Plan 
stresses the importance of 
energy efficiency measures 
in the public sector (Source: 
COM(2006) 545 final). It 
should be noted that in 
this sector, as opposed for 
example to the transport 
sector, the technological 
solutions needed for a low-
carbon society are already 
available.

6  COM(2010) 639 final of 
10 November 2010 — Energy 
2020 — A strategy for 
competitive, sustainable and 
secure energy.

7  The 7th Framework 
Programme for Research 
(FP7), Intelligent Energy 
Europe (IEE) and Energy 
Efficiency Financing Facility 
(EEFF).

8  European Commission 
(2009) Ex post Evaluation of 
Cohesion Policy Programmes 
2000–06 Co-financed by the 
ERDF (Objectives 1 and 2) — 
Work Package 5B: Environment 
and Climate Change, p. 43.

9  According to the Commission’s proposal, in more developed and transition regions, at least 80 % of ERDF resources must be focused on energy 
efficiency and renewables, research and innovation, and SME competitiveness, of which at least 20 % must be spent on energy efficiency and 
renewables; in less developed regions at least 50 % of ERDF resources must be focused on these three areas, of which at least 6 % must be spent on 
energy efficiency and renewables. (Source: COM(2011) 614 final of 6 October 2011, p. 4).

10  Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European 
Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2010, p. 25).

11  Article 17(1) of the Treaty on European Union (OJ C 326, 26.10.2012, p. 13) and Article 317 of the Treaty on the Functioning of the European Union 
(OJ C 326, 26.10.2012, p. 47).

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

11

7. 

The managing authorities, intermediate bodies and certifying authorities 
at the national, regional and local levels manage and monitor the imple-
mentation of the operational programmes12. The managing authorities 
or intermediate bodies select the projects and monitor their implemen-
tation. Project funding is subject to certain rules and conditions laid 
down partly at EU 13 and partly at Member State level (the criteria for 
selecting projects, the assessment of costs, benefits and potential earn-
ings of projects as well as economic, social and environmental impact 
assessments are usually made at Member State level with the exception 
of major projects in the 2007–13 period, where the Commission adopts 
a decision to co-finance the projects).

12  EU legislative summary 
on management and control 
systems for assistance 
granted under the Cohesion 
Policy funds can be found on: 
http://europa.eu/legislation_
summaries/regional_
policy/management/
g24241_en.htm

13  Regulation (EC) 
No 1083/2006.

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AUDIT SCOPE AND APPROACH

12

The main audit question was whether the Cohesion Policy investments 
in energy efficiency were cost-effective. To answer this question, the 
Court examined whether:

 — the right conditions had been established in programming and 
financing to enable cost-effective energy efficiency investments; 
and whether

14  OP Environment (Czech 
Republic), Interregional 
OP Energy (Italy) and OP 
for Promotion of Cohesion 
(Lithuania).

15  OP Basilicata (Italy).

 — the co-financed public buildings projects were cost-effective. 

Answering the question on programming and financing involved analys-
ing the relevant operational programmes, their ex ante evaluations and 
the prioritisation of the energy efficiency policy at national level and 
within individual economic sectors. It also required an analysis of the 
achievement of national energy efficiency targets and the impact of the 
Cohesion Policy funds on this achievement, the availability of national 
and private co-funding and a review of other national financial support 
mechanisms. 

The audit results shown in this Special Report are based on an examina-
tion of four operational programmes financed through the Cohesion 
Fund or the European Regional Development Fund in the Czech Repub-
lic, Italy and Lithuania. Three of the audited operational programmes are 
from the 2007–13 14 programming period and one is from the 2000–06 
programming period15. By the end of 2011, these countries had allocated 
1 199,3 million euro to energy efficiency projects under their respective 
operational programmes 33 % of the total amount of projects selected at 
that time under the Cohesion Policy funds allocated to energy efficiency 
in the 2007–13 programming period, see also Annex I ).

In order to answer the question on the cost-effectiveness of the public 
building projects, the audit examined 24 completed investment projects 
in the public buildings sector. The audit of the projects involved a review 
of  project  proposals  and  an  examination  of  the  project  outputs  and 
results to verify their cost-effectiveness. 

8. 

9. 

10. 

11. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

16  OECD/IEA (2008) 
Energy Efficiency Policy 
Recommendations, Paris.

17  SEC(2009) 889 final 
of 23 June 2009 — 
Synthesis of the complete 
assessment of all 27 
National Energy Efficiency 
Action Plans as required by 
Directive 2006/32/EC on 
energy end-use efficiency 
and energy services, p. 47.

OBSERVATIONS

13

12. 

13. 

14. 

15. 

PLANNING AND FINANCING

OPERATIONAL PROGRAMMES WERE NOT BASED ON PROPER NEEDS 
ASSESSMENTS 

Operational programmes should be based on needs assessments and, 
for energy efficiency measures, they should consider the national and 
regional energy efficiency action plans. Such needs assessments should 
assess energy consumption by end-use in all sectors, identify the econ- 
omy’s energy savings potentials and establish objectives and appropriate 
methods for evaluating the success of the plan as defined and promot-
ed by the International Energy Agency16. The energy savings potentials 
should be explored to the extent they are cost-effective.

The Commission also encouraged the Member States to ensure that 
relevant Cohesion Policy investments were fully integrated into national 
energy efficiency strategies and, as appropriate, consult the managing 
authorities on relevant measures, particularly at regional and local level, 
for inclusion in the National Energy Efficiency Action Plans17.

The  audited  operational  programmes  included  a number  of  actions 
which were based on Community Strategic Guidelines, National Stra-
tegic Reference Frameworks and national strategic plans and priorities. 
The energy efficiency priority axes were in line with both the Community 
Strategic Guidelines and the National Strategic Reference Frameworks, 
but their broad guidelines did not help turn the operational programmes 
into solid economic development instruments as described below.

The national authorities had not established a link between the opera -
tional programmes and National Energy Efficiency Action Plans. None 
of the audited operational programmes was preceded by, or included, 
a proper needs assessment encompassing a detailed description and 
analysis of the overall energy savings potential of the economy, by sec-
tor and by region, identifying the economy’s energy savings potential 
and establishing objectives and adequate methods for monitoring the 
achievement of the objectives of the programme. Hence, it was not clear 
why the various sectors should be funded and to what extent the energy 
savings potential could be achieved via existing market instruments and 
public subsidies, including the ERDF and CF. As a consequence, the op -
erational programmes did not identify the specific sectors where energy 
savings could be achieved and the options for achieving those savings, 
thereby justifying the chosen measures and their cost. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

14

16. 

For  illustration,  Table 2  provides  an  overview  of  the  contribution  of 
the operational programmes to the energy savings objectives of the 
three Member States audited. The Environment OP’s energy savings tar-
get (Czech Republic) is 21,7 % of the energy savings target set by the  
National Energy Efficiency Action Plan by 2016. In the other two coun-
tries, the operational programmes were expected to play only a minor 
role. For the Basilicata OP, no energy savings target was set.

17. 

When approving operational programmes, the Commission did not re-
quire the Member States to support their allocation of funds to energy 
efficiency measures with the results of needs assessments. 

TABLE 2

PLANNED CONTRIBUTION OF COHESION POLICY FUNDS TO THE ENERGY SAVINGS 
OBJECTIVES OF SELECTED MEMBER STATES

Member States

Operational Programme 
(allocations to energy 
efficiency)

Energy savings target 
of the Member States by 
2016 (in GJ) as stated in 
NEEAP (2007)

Energy savings target 
for the operational 
programme (in GJ)

%

Czech Republic

Environment

7 143 120 

1 550 000 (in 2007,   
originally 430 000)

21,7 (6)

Italy

Lithuania

Basilicata

Energy IOP

Promotion of Cohesion 
(renovation of public 
buildings)

45 477 720

Not set

52 500

13 669 200

360 000

N/A

0,1

2,6

Source: Operational programmes, NEEAPs (2007), calculations by ECA.

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18. 

19. 

BOX

15

COST-EFFECTIVENESS WAS NOT A DETERMINING FACTOR WHEN 
ALLOCATING FUNDING TO ENERGY EFFICIENCY MEASURES 

An analysis of cost-effectiveness compares costs (of investments or other 
types of spending) with the effects to be achieved. Cost-effectiveness 
considerations should be a major determinant of public spending deci-
sions18. The cost-effectiveness concept should be used especially when 
prioritising energy efficiency projects. The Commission has emphasised 
that the objective of saving 20 % of the EU’s projected energy consump -
tion by 2020 can be achieved by introducing cost-effective measures, 
which  means  that  the  investments  made  will  be  paid  back  from  the 
reduced energy bills within the lifetime of the energy savings measures, 
or often even much sooner19. 

Member States are required to ensure that energy efficiency improve-
ment measures are taken by the public sector, focusing on cost-effective 
measures which generate the largest energy savings in the shortest span 
of time20. Given the low level of the projected achievement of the 20 % 
target (see paragraph 4), the allocation of funding and selection of pro -
jects should aim at maximising cost-effectiveness (see the Box for actual 
practice reported in Belgium and Denmark). 

18  Article 27(1) and 
Article 27(2) of the 
Council Regulation (EC, 
Euratom) No 1605/2002 of 
25 June 2002 on the Financial 
Regulation applicable to 
the general budget of the 
European Communities 
(OJ L 248, 16.9.2002, p. 1).

19  SEC(2011) 277 final.

20  Article 5 of Directive 
2006/32/EC of the European 
Parliament and of the Council 
of 5 April 2006 on energy 
end-use efficiency and 
energy services and repealing 
Council Directive 93/76/EEC 
(OJ L 114, 27.4.2006, p. 64).

EXAMPLES OF THE USE OF THE COST-EFFECTIVENESS CONCEPT IN TWO MEMBER STATES

In Belgium, under the Flemish region’s ‘Energy management in Flemish government buildings’ Action Plan, all 
regional investments with a payback period of seven years or less must be implemented within three years. 
The first phase must be assessed within five years to decide whether, and if so how, a second phase of invest -
ments with a payback period of 10 years or less can be implemented. In Denmark, government institutions are 
required to implement energy savings measures with payback times of up to five years21.

21  Flemish Energy Efficiency Action Plan (2007) and Action Plan for Renewed Energy Conservation (2005), Denmark (www.ec.europa.eu/
energy).

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16

20. 

21. 

22. 

In none of the operational programmes audited was cost-effectiveness 
a determining factor for the allocation of funds to investments in energy 
efficiency. The managing authorities explained that the allocation of 
Cohesion Policy funds to energy efficiency projects was decided on the  
basis  of  the  governments’  estimates  of  energy  consumption  and  its 
planned reduction made by the government and also, to a certain ex -
tent, on the pattern of the absorption of appropriations in the regions 
in the previous programming period. However, it did not include invest-
ment cost projections of such reductions. The audited operational pro-
grammes did not provide any analysis which would have clarified how 
the funds had been allocated to each priority or measure.

22  For comparison, the annual 
Czech State Programme 
for Support of Energy 
Savings and Use of RES, 
now Programme EFEKT has 
operated since 1991. The 
simple payback period for the 
investments varied between 
five years (industry), seven 
years (tertiary sector) and 21 
years (households) with the 
average cost of 1 GJ saved of 
74 euro in the 2005–07period.

When assessing the operational programmes, the Commission did not 
require the Member States to justify their allocation of funds to energy 
efficiency measures on the basis of their cost-effectiveness, nor did it 
take this requirement into consideration in its inter-service consultations 
and Commission’s comments on draft operational programmes submit-
ted by the managing authorities for approval.

The original version of the Environment OP (Czech Republic) was ex-
pected to result in an investment cost of 722  euro for each GJ saved, 
resulting in a simple payback time of 61 years (with the second realloca -
tion, the cost decreased to 339  euro/GJ and the payback to 28 years)22. 
In Italy, the performance indicators and their values were not reliable. 
In the Basilicata OP 2000–06, the energy savings indicator related only 
to residential buildings. In the Energy IOP, the energy savings target was 
low, resulting in a very long payback period (from 288 to 444 years de -
pending on the energy price). In Promotion of Cohesion OP (Lithuania), 
the cost of 1GJ saved was estimated at 861  euro, with a payback period 
of 72 to 96 years depending on the energy price (see Table 3). The pay-
back periods are far too long considering the lifetime of the refurbished 
building components and also those of the buildings. 

WEAKNESSES IN PROJECT SELECTION CRITERIA 

23. 

The selection criteria used by managing authorities should be transpar-
ent and should ensure that support is given to cost-effective energy ef-
ficiency projects. They should set a standard or accepted value for each 
selected parameter, such as the (maximum) simple payback period for 
an investment, or the cost per unit of energy saved, which would help 
direct funds towards cost-effective investments. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

17

24. 

25. 

The managing authorities did not seek to ensure that the projects se -
lected provided the best ratio between energy consumption reduction 
and the investment made. The selection criteria used showed a number 
of weaknesses as explained in the following paragraphs. 

In the Environment OP (Czech Republic), the selection criteria were ob-
jective and transparent and helped the potential beneficiaries predict 
whether they would be successful. Each project proposal was checked 
against two ecological criteria (cost of 1GJ saved and annual cost of CO 2 
emissions reduction) and three technical criteria (percentage of energy 
saved against the original situation, cost of the renovation and energy 
standard achieved after project completion). In addition, projected five-
year energy savings were deducted from the total eligible project cost. 
However, even though the project selection criteria were objective and 
included the cost per 1 GJ saved, the acceptable value was between 200 
and 560 euro per GJ, indicating a payback period of 17 to 47 years, much 
longer than for the State Programmes (see footnote 22).

TABLE 3

COST OF 1 GJ SAVED IN FOUR AUDITED OPERATIONAL PROGRAMMES

Member States

Operational 
Programme 
(allocations to 
energy efficiency)

Czech Republic

Environment

Italy

Basilicata

Energy IOP

Lithuania

Promotion of 
Cohesion

Energy savings 
target of the 
operational 
programme 
(in GJ)

1 550 000  
(430 000) 1 

Not set

52 500

360 000

Budget 
(in million euro)

Cost of 1 GJ saved
(in euro)

Payback 
(in years)

525 (310)1

26 (17)1

764

310

339 
(722)1

N/A

14 560

28 (61)1

N/A

288–444

861

72–96

1  After the reallocation of funds.

Source: Operational programmes, calculations by ECA.

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26. 

27. 

28. 

29. 

18

In the Basilicata OP (Italy), the managing authority adopted, as the sole 
evaluation criterion, the ratio between the estimated quantity of energy 
saved during the lifetime of the investment and the total eligible cost. 
The quantity of energy saved was calculated by the managing author-
ity. Using this ratio, the managing authority intended to select projects 
which would potentially generate the highest return on total project 
cost. Since the calculations did not take into account the actual state 
of the buildings concerned (i.e. their energy class or actual energy con-
sumption) and were therefore based on energy savings estimates instead 
of reliable data from energy audits, it is difficult to conclude whether the 
selected projects offered cost-effective solutions. 

23  Article 27(3) of Regulation 
(EC, Euratom) No 1605/2002 
provides that specific, 
measurable, achievable, 
relevant and timed objectives 
shall be set for all sectors of 
activity covered by the EU 
budget. Achievement of 
those objectives must be 
monitored by performance 
indicators.

24  Court of Auditors Opinion 
No 7/2011 (OJ 47, 17.2.2012, 
p. 1).

In the Energy IOP (Italy), the managing authority required that, in order 
to be selected, a project should be of an exemplary nature, consistent 
with the IOP and the objectives of the regional energy plans, ‘ready’ (for 
the work to start) and innovative in terms of technology and mater- 
ials, while the amount of energy saved and the cost incurred, and ratio,  
between these, was not a determining factor for selection. 

In the Promotion of Cohesion OP (Lithuania), different project selection 
criteria were used at regional and national level for similar projects in the 
public building sector. In two measures out of three, although energy 
consumption was the main selection criterion, an energy audit was not 
required. Therefore projects related to public buildings with the highest 
energy consumption were selected for financing. Such criteria which do 
not include the cost of energy saved cannot, however, establish which 
building can bring the best ratio between energy savings and costs and 
will therefore only by chance result in cost-effective projects. 

INADEQUATE PERFORMANCE INDICATORS AND MONITORING

The management of any spending programme or development project 
should set rational objectives and establish objectively verifiable indica-
tors for their achievement. In the context of Cohesion Policy investments 
in energy efficiency, the managing authorities should establish a system 
of relevant and measurable performance indicators23. With the Commis-
sion’s help they should issue relevant guidelines in order to facilitate 
the monitoring of the achievements of projects, such as the quantity 
and cost of energy saved and their contribution to the achievement of 
energy efficiency policy objectives. Data collected should be of accept-
able quality in terms of relevance, comparability and reliability24.

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19

30. 

31. 

32. 

33. 

34. 

The managing authorities lacked baseline data on energy savings poten-
tial in the sectors selected for investment when they were drawing up 
their operational programmes. Without these data, the policymakers did 
not have the information to estimate to what extent a programme could 
contribute towards the achievement of a policy objective and therefore 
could not decide whether a programme should be financed or not. 

Performance  indicators  for  energy  efficiency  measures  were  not  ad- 
equate for the proper monitoring of the programmes. While the use of 
performance indicators was mandatory for the managing authorities, the 
type of indicator was not prescribed. As a result, the audited managing 
authorities used different measurement methodologies and units. There-
fore, the results of the energy efficiency measures are not comparable 
across the EU and cannot be aggregated. 

In the Environment OP (Czech Republic), the indicator for the energy ef-
ficiency measure was the total amount of energy saved by the measure 
in GJ. Data were reported at project level and then aggregated. These 
data were accurate and reliable since they were calculated by certified 
energy auditors. However, only technical output objectives (windows 
and doors replaced, walls and roofs insulated in m2) were binding for 
the projects, while energy savings targets were not.

In Italy, neither the baseline value on energy savings potential nor the 
measurement methodology had been established. In the Basilicata OP, 
the  physical  output  indicator  for  energy  savings  was  the  number  of 
projects, and the result indicator (energy savings in GJ/year) was based 
on theoretical estimates. In the Energy IOP, the absence of baseline data 
on energy savings potential was reflected in unreliable impact indica-
tors. The result and physical output indicators lacked a measurement 
methodology, therefore their target values were not justified. 

In the Promotion of Cohesion OP (Lithuania), the indicators were set 
for the operational programme, its priority axes and its measures. An 
increase or decrease in available funding for energy efficiency did not 
always  result  in  change  in  the  value  of  the  indicators  as  normally  is 
expected. At priority axis level, the indicators related to the decrease 
in energy intensity and, at measure level, the indicators regarded the 
number of projects and the amount of energy saved, but not the cost 
of energy saved. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

20

25  Commission working 
document No 2 The New 
Programming Period 2007-
13, Indicative Guidelines 
on Evaluation Methods: 
Monitoring and Evaluation 
Indicators, August 2006.

26  Commission working 
document on Outcome 
indicators and targets, 
Towards a new system of 
monitoring and evaluation 
in EU Cohesion Policy, 
June 2011, not published.

35. 

36. 

37. 

38. 

39. 

The Commission’s monitoring guidelines did not give recommended 
or binding indicators concerning energy efficiency 25. Furthermore, Co-
hesion Policy funds promote improved energy efficiency under many 
other headings in addition to energy efficiency (electricity, gas, petro-
leum products and various infrastructures). The Commission has not 
monitored the contribution of these measures to the achievement of 
the 2020 energy savings objective, nor has it envisaged the use of such 
performance indicators in the energy efficiency sector26.

IMPLEMENTATION OF PUBLIC BUILDINGS PROJECTS 

ENERGY EFFICIENCY NOT THE MAIN OBJECTIVE

The municipalities and regions should have plans based on needs as-
sessments, which should include inventories of all their buildings and 
their energy costs and prioritise those with the highest energy savings 
potential. This strategy would give priority to funding energy efficiency 
measures in buildings with the highest energy savings potential. 

The municipalities or regions did not have plans based on proper needs 
assessments. According to the managing authorities, buildings were typ- 
ically regarded as being ‘ready’ for funding if they were in need of re -
furbishment and their documentation complied with the requirements. 

The  projects  selected  for  financing  did  not  have  rational  objectives 
in terms of cost-effectiveness, i.e. cost per unit of energy saved. Their 
objectives were to save energy and improve comfort, but they were 
not selected for financing on the basis of their potential to produce 
financial benefits through energy savings, thus compensating for the 
cost incurred (see the Annex II for the payback periods for the audited 
projects). 

None of the audited countries had approved cost-optimal minimum en-
ergy performance requirements for buildings and building components, 
nor did they systematically collect data of the energy consumption pro-
files of existing buildings. Although national construction standards set 
limits for the thermal values of buildings and construction materials, 
beneficiaries used flexible approaches, technologies and materials to 
achieve various energy performance classes. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

21

27  SEC(2009) 889 final, p. 36 
and 59.

28  This is not required under 
the methodology for energy 
audits and audits of energy 
resources and cold water 
use in public buildings 
approved by the Minister of 
Economy order No 4-184 of 
29 April 2008.

29  Monitoring of 
the Programme for 
Refurbishment of Multi-
apartment Residential 
Buildings. Public Institution 
‘Kompetencijų centras’, 
ordered by HUDA, 2009. 

40. 

41. 

42. 

43. 

44. 

The managing authorities did not provide guidance for the implemen-
tation of energy efficiency measures, such as specifications for works, 
technologies to be employed and costs or optimal cost-benefit ratios 
to be achieved.

ENERGY AUDITS NOT ALWAYS OBLIGATORY OR NOT OF GOOD 
QUALITY

A  standard  energy  audit  includes  the  development  of  a  baseline  for 
a facility’s energy use, an evaluation of energy savings, and the cost-
effectiveness of appropriately selected energy conservation measures 
and should be performed before the funding decision. The energy audi-
tor should propose only options which lead to compliance with existing 
technical norms. The Commission is in favour of energy audits as they 
can be an appropriate tool for delivering energy savings, particularly 
in buildings and industry. For this reason, a number of Member States 
have  introduced  energy  audits  in  the  public  sector  and  made  them 
obligatory27.

In the Czech Republic, energy audits were obligatory for public buildings 
with an energy consumption of more than 1  500 GJ/year. The benefi-
ciaries were fully reliant on the recommendations of these audits. The 
energy auditor usually recommended a very costly investment option, 
because it promised higher energy savings than the cheaper options. 
No cost-effective option was proposed. 

In  Italy,  projects  were  not  preceded  by  an  energy  audit. The  project 
beneficiary was not required to monitor energy consumption before the 
project and after its completion. 

In Lithuania, the energy audits were not sufficiently detailed with regard 
to measurement data for buildings before renovation. Therefore, it was 
not possible to verify the actual benefits of projects28. Similar problems 
were noticed in the monitoring report on the implementation of the 
residential building modernisation programme29. Moreover, no baseline 
assessment of energy performance before project implementation was 
required. Energy audits had only been performed for two out of eight 
audited projects before the projects started and the remaining six were 
energy audited after the start of the refurbishment works.

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22

45. 

46. 

47. 

48. 

PROJECTS PRODUCED PHYSICAL OUTPUTS, BUT AT A HIGH COST IN 
RELATION TO THE ENERGY POTENTIALLY SAVED

All audited projects produced their physical outputs (e.g. windows and 
doors replaced, walls and roof insulated) to an appropriate standard and 
in the planned quantity. All the audited projects produced benefits such 
as building maintenance and increased comfort (e.g. reduction of noise, 
water/wind infiltrations) or better observance of current legal require-
ments in terms of safety (e.g. exit doors).

30  Project Kladno.

For 18 out of 24 audited projects the managing authorities could not 
state  how  far  the  projects  had  achieved  their  objectives  in  terms  of 
energy savings, because the energy savings had not been reliably meas-
ured. In the operational programmes audited in Italy and Lithuania, the 
resulting energy saving was only estimated by the managing authority or 
beneficiary. Only in the Czech Republic were the measurements carried 
out by qualified energy auditors. The definitive results of the projects in 
the Czech Republic and Lithuania should be evaluated three years after 
project completion. However, at the time of the audit, the monitoring 
system was not yet operational. 

According to the energy auditors’ preliminary reports, all but one of 
the audited projects in the Czech Republic achieved their objectives of 
energy consumption reduction 30 with the actual energy savings even 
exceeding those planned. However, all audited projects were costly in-
vestments with payback periods exceeding the lifetime of the individual 
components or buildings. The payback period for the audited projects 
varied from 27 to 148 years, with an average of 52 years. 

In  Basilicata  (Italy),  it  was  not  possible  to  assess  the  benefits  of  the  
audited projects in a reliable way. No energy audits had been carried out 
and no energy consumption data were collected before and after the 
projects. Saving 1 GJ was planned to cost 252 euro on average in the six 
audited projects. For five out of six projects, the beneficiaries provided 
the auditors with some energy consumption data which indicated that 
the projects might result in an average payback period of approximately 
50 years. 

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23

49. 

50. 

Under the Energy IOP (Italy), only one project had been finalised by the 
end of 2011 31. In the project application, the benefits were estimated 
at 1  million euro/year, which would have resulted in a simple payback 
period of 10 years. It is estimated that, after completion, the project will 
only generate energy savings of around 500 000  euro/year (the ben-
eficiary had made a  calculation error in the project application), which 
gives a simple payback period of 19 years. 

31  Project Cardarelli Hospital, 
Naples.

32  Projects Palanga, Gargzdai, 
Garliava, Alytus, and Vilnius 
University Clinics.

33  Projects Klaipeda, Kaunas 
oncology and Vilnius Mykolas 
Marcinkevicius.

In Lithuania (Promotion of Cohesion OP), actual investment costs in the 
audited projects were between 56 and 488 euro per m 2 of heated area, 
i.e. several times higher than the 31,85 euro per m 2 forecast in the Na-
tional Energy Efficiency Action Plan for 2006–10. Five of the eight au-
dited projects claimed to have achieved their planned energy savings, 
but these were not reliably measured 32. In three cases the results had 
not been measured yet33. For the audited projects, the planned simple 
payback period varied from 8 to 156 years, with an average of 58 years 
(see Annex II for the results of all audited projects). 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

CONCLUSIONS AND RECOMMENDATIONS

24

51. 

The right conditions in programming and financing had not been set to 
enable cost-effective energy efficiency investments using the Cohesion 
Policy funds, because: 

(a) 

The operational programmes audited had not benefited from prop-
er needs assessments to identify the specific sectors where energy 
savings  could  be  achieved  and  the  options  for  achieving  those 
savings in a cost-effective manner, thereby justifying the chosen 
measures and their cost. The national authorities did not ensure 
that they were integrated into the National Energy Efficiency Action 
Plans (see paragraphs 12 to 17).

(b)  cost-effectiveness concept, or the best relationship between re -
sources employed  and  results  achieved, was not a  determining 
factor when Member States allocated funding to energy efficiency 
measures and concrete projects. Neither was this concept part of 
the Commission’s assessment prior to approval of the operational 
programmes (see paragraphs 18 to 22, 23 to 28);

(c)  performance indicators for energy efficiency measures were not 
appropriate for the monitoring of the programmes. The Commis-
sion’s monitoring guidelines did not lay down indicators concern-
ing energy efficiency. Therefore, the results of the energy efficiency 
measures reported by the individual managing authorities are not 
comparable across the EU and cannot be aggregated (see para-
graphs 29 to 35).

52. 

The  audited  energy  efficiency  projects  in  public  buildings  were  not 
cost-effective. 

(a) 

although all the audited projects produced the planned physical 
output, such as replaced windows  and  doors or  insulated walls 
and roofs, the cost in relation to the potential energy savings was 
high. A more important consideration than energy efficiency was 
the need for refurbishment of public buildings. While the projects 
audited aimed at saving energy and improving comfort, they did 
not generate a good ratio between energy savings and the cor -
responding investment cost. The average planned payback period 
for  the  investments  was  around  50  years,  which  is  far  too  long 
considering the lifetime of the refurbished components and even 
of the buildings themselves (see paragraphs 18 to 22, 23 to 28, 36 
to 40, 45 to 50);

(b)  energy audits were either not mandatory (Italy, Lithuania) or, where 
they were required (Czech Republic), the investment options rec-
ommended in the energy audits were far too costly. In 18 out of 24 
audited projects actual energy savings could not be verified since 
they had not been reliably measured (see paragraphs 41 to 44).

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

25

RECOMMENDATIONS

The Commission should take the necessary initiatives, including mak-
ing further proposals on the regulations in order to make the Cohesion 
Policy funding for energy efficiency measures in the next programming 
period subject to:

(1) 

(2) 

(3) 

The establishment of a proper needs assessment at a programme 
level. Such needs assessment should assess energy consumption 
by end-use in all sectors, identify the economy’s energy savings 
potential  and  establish  objectives  and  adequate  methods  for 
evaluating the success of the energy plan. It should identify cost-
effective solutions in each sector.

Regular monitoring and the use of comparable performance in-
dicators. Each operational programme dealing with energy ef-
ficiency projects should be regularly monitored in terms of the 
development of the cost per unit of energy saved and the payback 
period planned and achieved by the operational programme. Also, 
data collected should be of acceptable quality in terms of rele- 
vance, comparability and reliability. Data on energy savings gen-
erated by the Cohesion Policy funds supported measures should 
be collected by the national authorities and aggregated by the 
Commission. The contribution of the Cohesion Policy funds to the 
target of saving 20 % of EU primary energy consumption by 2020 
should be identified.

The use of transparent project selection criteria and standard in-
vestment costs per unit of energy to be saved (using a unified 
measurement unit and methodology). The Commission should set 
a maximum acceptable simple payback period on the basis of the 
usual depreciation periods for the energy efficiency investments. 
This could be supported by the introduction of cost-optimal levels 
of reference buildings in the Member States complying with Direc-
tive 2010/31/EU on the energy performance of buildings. Energy 
audits should be used as the primary selection requirement for 
energy efficiency projects where the reference cost-optimal levels 
for buildings have not been yet laid down at the national level.

This Report was adopted by Chamber II, headed by Mr Harald NOACK, 
Member  of  the  Cour t  of  Auditors,  in  Luxembourg  at  its  meeting  of 
14 November 2012.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA
President

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

26

ANNEX I

COHESION POLICY FUNDS ALLOCATION TO ENERGY EFFICIENCY 2000–13 AND SELECTED 
PROJECTS 2007–11

Member State

Allocated 
amount 
2000–06
(euro)

Allocated 
amount 
2007–13
(euro)

Total funds 
allocation in 
the Member 
State 
2000–13 
(euro)

Total funds al-
location in the 
Member State/
total funds 
allocation 
(%) 

Czech Republic1

9 225 386

942 214 473

951 439 859

Italy

Poland1

Lithuania1

Germany

Hungary1

France

Bulgaria2

Romania2

United Kingdom

Spain

35 298 133

11 410 880

31 815 678

11 969 823

838 592 232

873 890 365

499 012 133

510 423 013

370 508 149

402 323 827

373 182 646

385 152 469

7 181 475

328 531 227

335 712 702

25 596 690

291 167 688

316 764 378

0

0

258 104 621

258 104 621

253 241 727

253 241 727

23 362 973

39 941 325

150 657 204

173 420 177

110 048 101

146 803 260

EU cross-border cooperation

4 029 659

119 642 025

123 671 684

Greece

Slovenia1

Latvia1

Slovakia1

Portugal

Ireland

Netherlands

Estonia1

Finland

Belgium

Malta1

Sweden

Austria

EU interregional cooperation

Luxembourg 

Cyprus1

Denmark

Total

42 623 511

71 170 000

113 793 511

0

105 700 000

105 700 000

21 048 774

1 334 466

0

22 864 270

793 076

2 568 584

190 740

5 271 426

0

0

2 864 306

6 891 928

0

0

0

60 220 000

78 584 184

74 200 883

19 000 000

34 250 000

28 760 241

24 243 917

18 976 147

12 550 000

9 173 788

6 156 013

0

504 873

0

0

81 268 774

79 918 650

74 200 883

41 864 270

35 043 076

31 328 825

24 434 657

24 247 573

12 550 000

9 173 788

9 020 319

6 891 928

504 873

0

0

Selected 
projects 
2007–11
(euro)

342 658 632

417 305 116

389 379 855

439 300 937

307 047 003

163 856 263

177 008 914

74 144 427

60 131 969

167 360 699

33 326 165

164 027 992

492 363 482

73 707 906

106 078 878

64 760 737

49 599 067

22 346 186

19 917 049

27 844 967

6 926 847

9 375 338

3 096 758

1 057 737

17 383 781

0

17,7

16,2

9,5

7,5

7,1

6,2

5,9

4,8

4,7

3,2

2,7

2,3

2,1

2,0

1,5

1,5

1,4

0,8

0,7

0,6

0,5

0,5

0,2

0,2

0,1

0,1

0,01

1 744 838

0

0

0

0

Selected 
projects
 2007-11 
(%)

36,4

49,8

78,0

118,6

82,3

49,9

60,8

28,7

23,7

111,1

30,3

137,1

691,8

69,7

176,2

82,4

66,8

117,6

58,2

96,8

28,6

51,0

24,7

11,5

282,4

0

345,6

0

0

71,5

306 283 104

5 078 392 272

5 384 675 376

100 %

3 632 051 543

Note: Rate of selection above 100 % means funds were reallocated from other priorities or measures within the same or from another operational 
programme.
1 Allocations from 2004. 
2 Allocations from 2007.
Source: DG Regional Policy database SF 2000–06, SFC2007, 2011 Annual Implementation Report for selected projects. 

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27

ANNEX II

PAYBACK PERIOD AND ENERGY SAVINGS ACHIEVED BY PROJECTS IN THE CZECH REPUBLIC, 
ITALY AND LITHUANIA

Project

Purpose

Uherské Hradiště

Wall, roof insulation, window replacement in a cultural 
house and a school

Karviná

Wall, roof insulation, window replacement in a high 
school

Frýdek-Místek

Wall, roof insulation, window replacement in a high 
school

Sokolov

Sokolov II

Volyně

Kladno

Plzeň

Melfi

Matera

Wall, roof insulation, window replacement in two pri-
mary schools, one kindergarten and a leisure centre

Wall, roof insulation, window replacements in three 
primary schools

Complex project of wall, roof insulation, window replace-
ment, replacement of coal powerplant in a joint high and 
upper vocational school, and dormitories

Wall, roof insulation, window replacement in eight 
kindergartens

Wall, roof insulation, window replacement in one pri-
mary school and one high school

Window replacement in a secondary school

Window replacement in the headquarters of the Province 
of Matera

Grassano

Window replacement in the primary school

Sant’Arcangelo

Window replacement in the main Sant’Arcangelo Com-
mune building

ENEA-Rotondella

Window replacement in the canteen building of the ENEA 
centre of Trisaia

Policoro

Window replacement in the primary school of Policoro

Napoli

Supply-side measures aiming at increasing the efficiency 
in production and distribution, such as the modernisa-
tion of the thermal power plant and replacement of 
technical devices, pipes and supply systems for hot and 
cold water and air used mainly in the main hospital 
building

Palanga

Palanga Vladas Jurgutis Secondary school renovation

Status on energy 
savings after one 
year

Payback period 
planned 
(in years)

Payback period 
actual/ 
estimated 
(in years)

Achieved

Achieved

Achieved

Achieved

Achieved

42

93

40

86

30

35

78

30

81

26

Achieved

148 (46)1

146 (26)1

Not achieved

Achieved

NA

Not reliably 
measured

Not reliably 
measured

Not reliably 
measured

Not reliably 
measured

Not reliably 
measured

Not reliably 
measured

Not reliably 
measured

27

55

20

42

28

37

21

33

10

40

32

48

NA

104

56

17

10

53

19

21

1  The energy auditor used price of brown coal (85,45 CZK/GJ) burnt originally in the reconstructed boiler station; for comparison, the auditor used average 
energy price of 279 CZK/GJ paid by the school for all energy inputs.

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Project

Purpose

Status on energy 
savings after one 
year

Payback period 
planned  
(in years)

Payback period 
actual/estimated 
(in years)

Gargždai

Klaipėda

Garliava

Kaunas

Vilnius

Viliaus Gaigalaitis elderly people care home renovation

Klaipėda Tourism School renovation

Increase in the efficiency of energy consumption in 
Kaunas County Hospital in Garliava

Renovation of the Kaunas Medical University’ the Oncol-
ogy Centre

Partial renovation of Mykolas Marcinkevičius Hos- 
pital and engineering systems, improving their energy 
characteristics

Alytus

Increase in EE of Alytus Vocational Training Centre

Roof insulation and renovation of heating and ventila-
tion systems of Vilnius University Hospital Santariškių 
Clinic Operative Unit

Vilnius

Average

Not reliably 
measured

NA

Not reliably 
measured

NA

Not reliably 
measured

Not reliably 
measured

NA

36

NA

31

NA

21

23

NA

49

156

57 

8 

63 

26

66

51

Source: Energy audits and projects’ actual outputs, calculation by auditors based on data from EAs, evaluation period between 25 and 50 years. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

29

REPLY OF THE 
COMMISSION

EXECUTIVE SUMMARY

II.
The Commission notes that the scope of the audited pro-
jects covers public building projects only.

IV. (a)
There might be a potential conflict between the results of 
a ‘needs assessment’ and a ‘cost-effectiveness’ approach. 
In fact, the assessment of needs might lead to a different 
prioritisation compared to a prioritisation on the basis of 
cost-effectiveness.

IV. (a) First indent
The energy efficiency policy has experienced a dynamic 
development  in  recent  years. This  was  not  yet  the  case 
at the time of the drafting, negotiation and approval of 
the  programmes  of  the  2007–13  programming  period. 
Only since then, the Commission has developed in full its 
energy  efficiency  policy. The  four  audited  programmes 
were negotiated before the Commission fully developed 
its energy efficiency policy.

All operational programmes financed by Cohesion Policy 
have to comply with the policy’s objectives to strengthen 
economic,  social  and  territorial  cohesion  and  promote 
overall harmonious development by reducing disparities 
between the levels of development of regions and promot-
ing development in least favoured regions.

Cohesion  Policy  is  an  integrated  policy.  In  the  case  of 
investments in public buildings, it is important to take an 
integrated approach and not carry out energy efficiency 
improvements  alone. They  should  be  rather  considered 
as part of a general refurbishment leading to the overall 
improvement of a particular building.

As a general requirement for all operational programmes 
funded  under  Cohesion  Policy,  programmes  contain ‘an 
analysis of the situation of the eligible area or sector in 
terms of strengths and weaknesses and the strategy cho-
sen in response’. A needs assessment can be useful in this 
context.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

30

REPLY OF THE  
COMMISSION

All 2000–06  and  2007–13 programmes had been negoti-
ated and approved before the first National Energy Effi-
ciency  Action  Plans  (NEEAPs)  were  due  (i.e.  June  2007). 
NEEAPs are not designed as an investment strategy for the 
use of Cohesion Policy funds for energy efficiency-related 
allocations. 

IV. (a) Second indent
Energy efficiency is one of multiple objectives of Cohe-
sion Policy programmes. Cohesion Policy is an integrated 
policy. In the case of investments in public buildings, it is 
important to take an integrated approach and not carry 
out energy efficiency improvements alone. They should 
be rather considered as part of a general refurbishment 
leading to the overall improvement of a particular build -
ing. Cost effectiveness of the investments is, therefore, one 
of the determining factors for the allocation of the funds 
within a programme. The programme can allocate funds 
also with a view to other Cohesion Policy objectives.

I n  the  case  of  energy  efficienc y  investments  in  pub -
lic  buildings,  there  is  a case  for  deep  renovation,  going 
beyond  cost-optimal  levels.  In  this  context,  the  actual 
level of the energy savings achieved is an important factor. 
Deep renovations would obviously need longer payback 
times. As the Court states in § 3, public measures can be 
used to address market failures. While the market could 
provide financing for the cost-effective part of the energy 
efficiency investment, the Cohesion Policy co-financing 
element could be used to support the part of the invest-
ment going beyond that level, thus ensuring higher energy 
savings and avoiding additional works in the future, which 
would  potentially  make  the  total  investment  cost  even 
higher.

IV. (a) Third indent
The  Commission  ack nowledges  that  the  current  legal 
framework for Cohesion Policy does not prescribe the type 
of indicators to be used for monitoring purposes and is 
working towards the improvement of programme perfor-
mance. It has, therefore, proposed in the draft ERDF Regu-
lation for the programming period 2014–20 three common 
indicators for energy efficiency for all Member States: (a) 
number of households with improved energy consumption 
classification; (b) decrease of primary energy consumption 
of public buildings; and (c) number of additional energy 
users  connected  to  smar t  grids  (COM(2011)  614  final, 
Annex to the draft Regulation). For these three indicators, 
EU-level aggregation would thus be possible.

IV. (b) First indent
Energy efficiency is one of multiple objectives of Cohesion 
Policy programmes. In the case of investments in public 
buildings, it is important to take an integrated approach 
and not carry out energy efficiency improvements alone, 
but rather consider them as part of a general refurbish -
ment leading to the overall improvement of a particular 
building. If a particular public building is up for renovation 
at a specific point in time it makes sense to also address 
the energy efficiency aspects in the same round of work. 
Cost  effectiveness  of  the  investments  is,  therefore,  one 
of the determining factors for the allocation of the funds 
within a programme. The programme can allocate funds 
also with a view to other Cohesion Policy objectives. The 
Commission considers that there is a case for deep reno -
vation, going beyond cost-optimal levels. The new Energy 
Efficiency  Directive  will  also  require  Member  States  to 
develop  long  term  renovation  strategies  for  the  whole 
building stock, including policies to stimulate deep reno-
vations. Deep renovations would obviously need longer 
payback times. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

31

V. (3)
The  draft  Common  Provisions  Regulation  proposes  that 
the monitoring committee shall examine and approve the 
methodology and criteria for selection of operations 4. Fur-
thermore, the managing authority shall draw up and, once 
approved, apply transparent and non-discriminatory selec-
tion criteria5. However, setting standard investment costs 
per kWh saved across the EU is not possible because these 
costs differ considerably due to different prices for equip-
ment and different levels of already implemented savings.

Finally, energy efficiency investments in public buildings 
may  be  part  of ‘deep  renovation’  works  entailing  longer 
payback times.

4  Article 100. 

5  Article 114. 

IV. (b) Second indent
The  Commission  agrees  on  the  need  for  good  quality 
energy  audits  as  a basis  for  investments  in  energy  effi -
ciency in buildings. The new Energy Efficiency Directive 
will require Member States to promote the availability of 
high quality and cost-effective energy audits and energy 
management systems to all final customers.

V. (1)
The Commission is working along the lines of the recom-
mendation. The  proposed  2014–20  Common  Provisions 
Regulation1 requires that: 

 — Partnership Contracts with Member States shall include an 
analysis of disparities and development needs with reference 
to the thematic objectives, the Common Strategic Framework 
key actions and the Country-Specific Recommendations un-
der the European semester2; and

 — all programmes should be in line with these contracts3. 

V. (2)
The proposed 2014–20 ERDF Regulation envisages three 
common indicators for energy efficiency for all Member 
States, thus making an aggregation at EU level possible.

However, the Commission cannot fully accept the set-up of 
the recommended indicators at programme level as their 
comparability would be limited given that these indicators 
depend on many factors (e.g. energy/commodity prices, 
climate conditions) that could render them misleading. 

1  COM(2012) 496. 

2  Article 14. 

3  Article 24.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION32

OBSERVATIONS

12.
The energy efficiency policy has experienced a dynamic 
development  in  recent  years. This  was  not  yet  the  case 
at the time of the drafting, negotiation and approval of 
the  programmes  of  the  2007–13  programming  period. 
Only since then, the Commission has developed in full its 
energy  efficiency  policy. The  four  audited  programmes 
were negotiated before the Commission fully developed 
its energy efficiency policy.

A s   a  g e n e r a l   r e q u i r e m e n t   f o r   a l l   o p e r a t i o n a l   p r o -
grammes funded under EU Cohesion Policy (Article 37 of 
Regulation (EC) No 1083/2006), programmes contain ‘an 
analysis of the situation of the eligible area or sector in 
terms of strengths and weaknesses and the strategy cho-
sen in response’. A needs assessment can be useful in this 
context.

Cohesion Policy programmes are implemented in differing 
economic, social and territorial contexts. These exogen- 
ous factors and the inherent uncertainties are mitigating 
factors that impact on the planning, the implementation 
and the outcome of the projects. As regards the quoted 
recommendations  from  the  OECD/IEA,  these  can  cer-
tainly be very useful but they do not constitute any legal 
requirement in relation to Cohesion Policy programming. 
Moreover,  they  were  only  published  in  2008,  when  the 
operational programmes had already been negotiated and 
approved.

14.
The audited sample comprised four programmes in three 
Member States. The programmes represent around 28 % of 
the funds to be allocated to energy efficiency in the period 
2000–13. The projects audited represent a very small share 
of  this  amount.  One  audited  programme  was  from  the 
2000–06 programming period. Therefore, the results can-
not be extrapolated to the policy as a whole.

15.
A l l   2 0 0 0 – 0 6   a n d   2 0 0 7 – 1 3   p r o g r a m m e s   h a d   b e e n 
n e g o t i a t e d   a n d   a p p ro v e d   b e fo re   t h e   f i r s t   N a t i o n a l 
Energy  Efficienc y  Ac tion  Plans  (NEEAPs)  required  by 
Directive 2006/32/EC were due (i.e. June 2007). Moreover, 
the  NEEAPs  are  not  designed  as  an  investment  strategy 
for the use of Cohesion Policy funds for energy efficiency-
related allocations. While a voluntary template established 
for  the  second  NEEAPs,  submitted  by  Member  States  in 
2011/2012, gave them an opportunity to provide indica-
tions as regards the allocations for the implementation of 
energy efficiency measures using Cohesion Policy funds, 
this template was not mandatory for the Member States. 

Concerning the needs assessment, see the Commission’s 
reply to paragraph 12.

17.
Concer ning  the  needs  assessment,  see  the  Commis-
sion’s  reply  to  §12.  When  approving  programmes,  the 
Commission required ‘an analysis of the situation of the 
eligible  area  or  sector  in  terms  of  strengths  and  weak-
nesses and the strategy chosen in response’ (Article 37 of 
Regulation (EC) No 1083/2006).

18.
The Commission notes that there is a conflict between the 
principle  of  cost-effectiveness  as  a factor  for  allocation 
funding  to  energy  efficiency  measures  and  the  request 
to  prioritise  energy  efficiency  measures  on  the  basis  of 
a needs assessment (see §§12–17). Both methodological 
approaches to prioritise investments may lead to different 
results. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION33

19.
Article 5 of Directive 2006/32/EC is not obliging the Mem-
ber States to accomplish this only with Cohesion Policy 
funds, or, to put it differently, the Cohesion Policy funds 
are  not  the  only  funding  source  for  implementing  the 
Directive.

The Commission refers also to its reply to paragraph 18.

The Commission does not consider the examples in Box 1 
directly comparable to the audited programmes.

20.
Energy efficiency is one of multiple objectives of Cohe-
sion Policy programmes. Cohesion Policy is an integrated 
policy. In the case of investments in public buildings, it is 
important to take an integrated approach and not carry 
out energy efficiency improvements alone. They should 
be rather considered as part of a general refurbishment 
leading to the overall improvement of a particular build -
ing. Cost effectiveness of the investments is, therefore, one 
of the determining factors for the allocation of the funds 
within a programme. The programme can allocate funds 
also with a view to other Cohesion Policy objectives. In the 
case of energy efficiency investments in public buildings, 
the Commission considers that there is a case for deep ren -
ovation, going beyond cost-optimal levels (SWD(2012) 61 
final of 14  March  2012, Part II, pp. 14–15). The new Energy 
Efficiency  Directive  will  also  require  Member  States  to 
develop  long-term  renovation  strategies  for  the  whole 
building stock, including policies to stimulate deep reno-
vations.  As  the  Court  states  in  §  3,  public  measures  can 
be used to address market failures. While the market could 
provide financing for the cost-effective part of the energy 
efficiency investment, the Cohesion Policy co-financing 
element could be used to support the part of the invest-
ment going beyond that level, thus ensuring higher energy 
savings and avoiding additional works in the future, which 
would  potentially  make  the  total  investment  cost  even 
higher.

It is stressed in the new Energy Efficiency Directive that 
public authorities are expected to take an exemplary role 
in this area. They can do so in engaging in state-of-the-art, 
deep renovation of public buildings for improved energy 
efficiency, thus also strengthening the innovation demand 
side.

21.
It is not possible to assess cost-effectiveness at programme 
level but only at project level. Cost-effectiveness consid-
erations may be defined in the selection criteria of the spe-
cific interventions. Directive 2006/32/EC stresses that the 
Member States shall ensure that the public sector fulfils an 
exemplary role. As for the specific projects, Member States 
themselves are in charge of the selection. In the case of 
deep renovation projects, the assessment of needs might 
lead to a different prioritisation compared to a  prioritisa-
tion on the basis of cost-effectiveness.

22.
I n  the  case  of  energy  efficienc y  investments  in  pub -
lic  buildings,  there  is  a case  for  deep  renovation,  going 
beyond  cost-optimal  levels.  In  this  context,  the  actual 
level of the energy savings achieved is an important factor. 
Deep renovations would obviously need longer payback 
times.

23.
The Commission refers to its reply to paragraph 22 and the 
principle of shared management.

For  example,  the  Lithuanian  OP  Promotion  of  Cohesion 
refers  to  pursue  better  environmental  quality  by  giving 
special attention to increasing efficiency of using energy. 
Specific selection criteria are not set at programme level.

24.
The Commission refers to its replies to paragraphs 20 and 
22. 

26.
The Commission refers to its reply to paragraph 22. 

27.
The Commission refers to its reply to paragraph 22.

28.
The Commission refers to its reply to paragraph 22. Follow-
ing the second Lithuanian NEEAP of 2011, the energy audit 
is now obligatory. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION34

31.
The Commission acknowledges the increasing importance 
of energy efficiency and has proposed in the draft ERDF 
Regulation  for  the  programming  period  2014–20  three 
common indicators for energy efficiency for all Member 
States: (a) Number of households with improved energy 
consumption  classification;  (b)  D ecrease  of  pr imar y 
energy  consumption  of  public  buildings;  and  (c)  Num-
ber of additional energy users connected to smart grids 
(COM(2011) 614 final, Annex to the draft Regulation.

34.
As regards the quality and appropriateness of the indicator 
system, the Commission questioned the Lithuanian system 
at the time of the negotiation of the programme. For the 
2014–20 period, it is clear that these two aspects need to 
be very carefully assessed.

35.
The Commission refers to its reply to paragraph 31.

It  was  on  the  Commission’s  initiative,  with  the  working 
document No 2  in  2006, that some suggestions as to core 
indicators being used for aggregating values at EU level 
were first made.

The 2020 energy savings objective was only set in 2007, 
after the negotiation and the approval of the programmes.

The  document ‘Outcome  indicators  and  targets’  was 
a methodological paper prepared by academics as part of 
the reflection on the future Cohesion Policy, and not an 
official position paper of the Commission. 

36.
The Commission refers to its reply to paragraph 12. 

In  view  of  the  2014–20  programming  period,  the  new 
Energy Efficiency Directive will support work in this area 
by encouraging regional and local government energy effi-
ciency plans and energy management systems, renovation 
roadmaps and heat maps for the use of Combined Heat 
and Power.

The Commission refers also to its replies to paragraphs 18, 
20 and 22. 

37.
The Commission refers to its replies to paragraphs 12, 18, 
20  and  22.  If  a  particular  public  building  is  up  for  reno-
vation  at  a specific  point  in  time  it  makes  sense  to  also 
address the energy efficiency aspects in the same round 
of work.

38.
The Commission refers to its replies to paragraphs 18, 20 
and  22  and  the  fact  that  deep  renovations  need  longer 
payback times. The selection of projects takes place on the 
basis of the project description in the project application 
which may aim at more objectives than energy efficiency. 

39.
During the period covered by the audit, Member States 
were not obliged to set cost-optimal Minimum Energy Per-
formance Requirements (MEPRs). This obligation will only 
exist once Member States have undertaken their national 
cost  optimal  calculations  as  per  Delegated  Regulation 
244/2012. Nevertheless, they all should have had ‘normal’ 
MEPRs in place as per Directive 2002/91/EC.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION35

CONCLUSIONS AND RECOMMENDATIONS

41.
The new Energy Efficiency Directive will require Member 
States to promote the availability of high quality and cost-
effective energy audits and energy management systems 
to all final customers.

45.
The Commission notes that the projects produced benefits 
and  refers  to  its  replies  in  paragraphs  20  and  22  on  the 
integrated approach in Cohesion Policy.

46.
The verification of the regularity of the interventions and 
of their outputs lies within the competence of the man- 
aging authorities on the basis of the information submit-
ted by the beneficiaries.

51.
There might be a potential conflict between the results of 
a ‘needs assessment’ and a ‘cost-effectiveness’ approach. 
In fact, the assessment of needs might lead to a different 
prioritisation compared to a prioritisation on the basis of 
cost-effectiveness.

51. (a)
The energy efficiency policy has experienced a dynamic 
development  in  recent  years. This  was  not  yet  the  case 
at the time of the drafting, negotiation and approval of 
the  programmes  of  the  2007–13  programming  period. 
Only since then, the Commission has developed in full its 
energy  efficiency  policy. The  four  audited  programmes 
were negotiated before the Commission fully developed 
its energy efficiency policy.

Cohesion  Policy  is  an  integrated  policy.  In  the  case  of 
investments in public buildings, it is important to take an 
integrated approach and not carry out energy efficiency 
improvements  alone. They  should  be  rather  considered 
as part of a general refurbishment leading to the overall 
improvement of a particular building. As a  general require-
ment for all operational programmes funded under Cohe-
sion Policy, programmes contain ‘an analysis of the situa-
tion of the eligible area or sector in terms of strengths and 
weaknesses and the strategy chosen in response’. A needs 
assessment can be useful in this context.

All 2000–06  and  2007–13 programmes had been negoti-
ated and approved before the first National Energy Effi-
ciency  Action  Plans  (NEEAPs)  were  due  (i.e.  June  2007). 
NEEAPs are not designed as an investment strategy for the 
use of Cohesion Policy funds for energy efficiency-related 
allocations. 

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION36

52. (a)
Energy efficiency is one of multiple objectives of Cohesion 
Policy programmes. In the case of investments in public 
buildings, it is important to take an integrated approach 
and not carry out energy efficiency improvements alone, 
but rather consider them as part of a general refurbish -
ment leading to the overall improvement of a particular 
building. If a particular public building is up for renovation 
at a specific point in time it makes sense to also address 
the energy efficiency aspects in the same round of work. In 
the case of energy efficiency investments in public build-
ings,  there  is  a case  for  deep  renovation,  going  beyond 
cost-optimal levels. In this context, the actual level of the 
energy savings achieved is an important factor. Deep reno-
vations would obviously need longer payback times. 

52. (b)
The  Commission  agrees  on  the  need  for  good  quality 
energy  audits  as  a basis  for  investments  in  energy  effi -
ciency in buildings. The new Energy Efficiency Directive 
will require Member States to promote the availability of 
high quality and cost-effective energy audits and energy 
management systems to all final customers.

51. (b)
Energy efficiency is one of multiple objectives of Cohe-
sion Policy programmes. Cohesion Policy is an integrated 
policy. In the case of investments in public buildings, it is 
important to take an integrated approach and not carry 
out energy efficiency improvements alone. They should 
be rather considered as part of a general refurbishment 
leading to the overall improvement of a particular build -
ing. Cost effectiveness of the investments is, therefore, one 
of the determining factors for the allocation of the funds 
within a programme. The programme can allocate funds 
also with view to other Cohesion Policy objectives.

I n  the  case  of  energy  efficienc y  investments  in  pub -
lic  buildings,  there  is  a case  for  deep  renovation,  going 
beyond  cost-optimal  levels.  In  this  context,  the  actual 
level of the energy savings achieved is an important factor. 
Deep renovations would obviously need longer payback 
times. As the Court states in §3, public measures can be 
used to address market failures. While the market could 
provide financing for the cost-effective part of the energy 
efficiency investment, the Cohesion Policy co-financing 
element could be used to support the part of the invest-
ment going beyond that level, thus ensuring higher energy 
savings and avoiding additional works in the future, which 
would  potentially  make  the  total  investment  cost  even 
higher.

51. (c)
The  Commission  ack nowledges  that  the  current  legal 
framework for Cohesion Policy does not prescribe the type 
of indicators to be used for monitoring purposes. It has, 
therefore, proposed in the draft ERDF Regulation for the 
programming period 2014–20 three common indicators 
for energy efficiency for all Member States: (a) number of 
households with improved energy consumption classifica-
tion; (b) decrease of primary energy consumption of public 
buildings; and (c) number of additional energy users con-
nected to smart grids (COM(2011) 614 final, Annex to the 
draft Regulation.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSION37

(3)
The Commission has proposed in Article 100 of the draft 
Common  Provisions  Regulation  for  the  programming 
period 2014–20 (COM(2012) 496 final) that the monitor-
ing committee shall examine and approve the methodol-
ogy and criteria for selection of operations. In Article 114, 
the draft Regulation further proposes that the managing 
authority shall draw up and, once approved, apply appro-
priate selection procedures and criteria that (i) are non-
discriminatory and transparent; and (ii) take into account 
the general principles of promotion of equality between 
men and women and non-discrimination and sustainable 
development.

However, the Commission cannot fully agree to the rec-
ommendation. Setting standard investment costs per kWh 
saved across the EU is not possible because these costs dif-
fer considerably due to different prices for equipment and 
different levels of already implemented savings.

The Commission is developing energy efficiency project 
assessment  guidelines,  which  could  serve  as  a basis  for 
setting up project evaluation, monitoring and verification 
mechanisms. Moreover, the new Energy Efficiency Direc-
tive will require Member States to promote the availability 
of high quality energy audits to all final customers.

In the case of investments in energy efficiency in public 
buildings, it is important to take an integrated approach 
and not carry out energy efficiency improvements alone, 
but rather consider them as part of a general refurbish -
ment leading to the overall improvement of a particular 
building. 

The  Commission  considers  that  there  is  a case  for  deep 
renovation, going beyond cost-optimal levels. Deep reno-
vations would obviously need longer payback times.

RECOMMENDATIONS

(1)
The Commission is working along the lines of the recom-
mendation. It has proposed in the 2014–20 Common Provi-
sions Regulation6 that 

 — Partnership Contracts with Member States shall include an 
analysis of disparities and development needs with reference 
to the thematic objectives, the Common Strategic Framework 
key actions and the Country-Specific Recommendations  
under the European semester7, and

 — all programmes should be in line with these contracts8. 

The  new  Energy  Efficienc y  Directive  adopted  in  2012 
will support the work in the area of energy efficiency by  
encouraging regional and local government energy effi-
ciency plans (i.e. needs assessments in the area of energy 
efficiency) and energy management systems, renovation 
roadmaps and heat maps for the use of Combined Heat 
and Power.

(2)
The  Commission  is  work ing  towards  the  improvement 
of programme performance. It has proposed in the draft 
ERDF  Regulation  for  the  programming  period  2014–20 
three  common  indicators  for  energy  efficienc y  for  all 
Member States: (a) number of households with improved 
energy consumption classification; (b) decrease of primary 
energy  consumption  of  public  buildings;  and  (c)  num-
ber of additional energy users connected to smart grids 
(COM(2011) 614 final, Annex to the draft Regulation). For 
these three indicators, EU level aggregation would thus be 
possible.

However, the Commission cannot fully agree to the rec-
ommendation, as the comparability of the recommended 
indicators  would  be  limited,  given  the  fact  that  these 
indicators depend on many factors (e.g. energy/commod-
ity  prices,  climate  conditions)  that  could  render  them 
misleading. 

6  COM(2012) 496. 

7  Article 14. 

8  Article 24.

Special Report No 21/2012 – Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

REPLY OF THE  COMMISSIONEuropean Court of Auditors

Special Report No 21/2012
Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency

Luxembourg: Publications Office of the European Union

2013 — 37 pp. — 21 × 29.7 cm

ISBN 978-92-9241-027-8
doi:10.2865/44641

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THE  COUR T  ASSESSED WHE THER  COHESION  POLICY  INVESTMENTS  IN 

ENERGY EFFICIENCY WERE COST-EFFECTIVE. THE COURT CONCLUDES THAT 

THE  RIGHT  CONDITIONS  IN  PROGRAMMING  AND  FINANCING  HAD  NOT 

BEEN SET AND THAT THE AUDITED PROJEC TS IN PUBLIC BUILDINGS HAD 

A LONG AVERAGE PLANNED PAYBACK PERIOD (AROUND 50 YEARS). THE 

COURT RECOMMENDS THAT THE COMMISSION MAKE THE COHESION POL-

ICY FUNDING FOR ENERGY EFFICIENCY MEASURES SUBJECT TO A PROPER 

NEEDS ASSESSMENT, REGULAR MONITORING AND THE USE OF COMPAR- 

ABLE PERFORMANCE INDICATORS AS WELL AS THE USE OF TRANSPARENT 

PROJEC T SELEC TION CRITERIA AND STANDARD INVESTMENT COSTS PER 

UNIT OF ENERGY TO BE SAVED, WITH A MAXIMUM ACCEPTABLE SIMPLE 

PAYBACK PERIOD. 

EUROPEAN COURT OF AUDITORS